Rick Smith, CEO of Axon Enterprises.
Adam Jeffrey | CNBC
axon enterpriseThe company’s shares plunged 11% after the Taser gun maker missed Wall Street’s third-quarter profit expectations as it grapples with tariff restrictions.
Adjusted earnings were $1.17 per share, below LSEG’s estimate of $1.52 per share. Adjusted gross profit margin fell 50 basis points year over year to 62.7%, which Axon attributed to the impact of tariffs.
Axon’s connected devices business, which includes Tasers and anti-drone equipment, felt the biggest hit overall in the first quarter due to the tariffs. Revenue for this business unit exceeded $405 million, an increase of 24% year over year.
“We think this is kind of a one-time adjustment as long as tariffs remain in place,” Treasurer Brittany Bagley said on an earnings call. “Now it’s built into gross profit.”
Bagley expects growth in the company’s software business to eventually offset the loss in profits over the long term. Software and services revenue increased 41% year over year to $305 million.
Total sales rose 31% year over year to $711 million, exceeding the $704 million expected by analysts compiled by LSEG. The United States accounted for 84% of sales.
The Arizona-based company reported a net loss of $2.2 million, or 3 cents per share, compared with net income of $67 million, or 86 cents per share, in the year-ago period.
Axon raised its full-year sales forecast to $2.74 billion from $2.65 billion-$2.73 billion. Analysts at FactSet had expected $2.72 billion at the midpoint.
The company expects fourth-quarter sales of $750 million to $755 million, higher than the $746 million expected by analysts at LSEG.
Along with this result, Axon announced that it will acquire Carbine in a deal that values the emergency communications platform at $625 million. The deal is expected to close in the first quarter of next year.
Axon stock has risen more than 40% over the past year as demand for the company’s security tools accelerates. By 2024, the stock price has more than doubled.
“We are building an elite business that is still far from its ultimate potential, but we are working with a team that is rapidly buying into our mission,” Axon President Josh Isner said in an earnings call.
